Monday, May 30, 2016

VIENNA, Austria (Bloomberg) -- OPEC members gathering in Vienna June 2
are expected to go along with a Saudi Arabia-led policy focused on
squeezing out rivals amid signs the strategy is working. That means the
meeting may be less fraught than the previous summit in December, which
ended with public criticism of the Saudi position from Venezuela and
Iran.
By allowing prices to fall, high-cost producers are being
forced out, easing the supply glut and spurring a rally of 80% since
January to about $50/bbl. All but one of 27 analysts surveyed by
Bloomberg said the Organization of Petroleum Exporting Countries will
stick with the strategy. An alternative proposal—to freeze output—was
finally rejected in Doha last month.
The group may also choose a
secretary-general to replace Abdalla El-Badri, whose term has been
extended after members failed to agree on a successor. In recent months,
three new hopefuls have emerged to try and break the impasse: Nigeria’s
Mohammed Barkindo, Indonesia’s Mahendra Siregar and Venezuela’s Ali
Rodriguez.
Following are the latest comments from OPEC members
and analysts. The respective shares of supply are based on April levels.
The estimates for the price each member needs to balance its budget are
from the International Monetary Fund unless stated otherwise.
ALGERIA
Price needed: $87.6 Share of OPEC production: 3.3%.
Algeria tried, and failed, last year to organize a meeting of
non-OPEC/OPEC members to push for output cuts, as years of declining
crude production and low prices weighed on its fiscal deficit. A freeze
by producers is needed immediately to stabilize prices, Salah Khebri,
minister of energy and mines, said in an interview mid-May. “Our main
message to the next OPEC meeting is that it needs to restore unity and
work for the benefit of all members collectively,” he said.
ANGOLA
Price needed: $93.14 (RBC Capital Markets) Share of OPEC production: 5.4%
Angola is seeking an IMF loan as state revenue plunges. Its
over-reliance on strong oil prices leaves savings and levels of inward
investment ‘‘highly vulnerable’’ to swings in the global economy, Fitch
unit BMI Research said in emailed report.
ECUADOR
Price needed: $75.16 (RBC Capital Markets) Share of OPEC production: 1.7%
Ecuador supported an oil-output freeze at the Doha meeting. Minister
Jose Icaza met with his Venezuelan counterpart before the summit to
discuss prices and seek to agree on a unified position. Icaza became
Ecuador’s new oil minister in early May following the resignation of
Carlos Pareja.
INDONESIA
Unlike other OPEC members,
Indonesia is still a net oil importer so the fiscal break-even concept
is not applicable. Share of OPEC production: 2.2%
Indonesia
rejoined OPEC at the Dec. 4 meeting, seven years after suspending its
membership. It will stick to its plan to increase oil output this year
even if some of the world’s biggest producers move to cap production,
Energy and Mineral Resources Minister Sudirman Said said in February.
IRAN
Price needed: $61.5 Share of OPEC production: 11%
The Persian Gulf nation is rebuilding its energy industry and restoring
crude sales after the lifting of international restrictions in January.
Exports are already at 2 MMbpd, just short of pre-sanctions levels, the
IEA said in a recent monthly oil market report. The head of the state
oil company said the country—a key advocate of output restraint in
previous years—has no plans to join any output freeze as it remains
focused on restoring exports.
IRAQ
Price needed: $59.7 Share of OPEC production: 13%
Production has jumped more than 40% since mid-2014 and exports are at
near-record levels. But plunging government revenue is hampering the
state’s ability to invest, and OPEC’s second-biggest crude producer is
reaching the limits of its capacity to store and export oil, according
to analysts at Energy Aspects Ltd. and FGE. Oil Minister Adel Abdul
Mahdi resigned in February amid ongoing political turmoil, his duties
are being carried out by Fayyad Al-Nima.
KUWAIT
Price needed: $52.1 Share of OPEC production: 8.7%
Kuwait plans to boost oil production to more than 3 MMbpd within
months, doubling output from where it stood during April’s oil-worker
strike. Kuwait’s acting Oil Minister Anas Al-Saleh, said on May 18 that
OPEC’s policy “has been working well.”
LIBYA
Price needed: $195.2 Share of OPEC production: 0.9%
OPEC’s smallest producer. Competing administrations of Libya’s
state-run National Oil Corp. in the east and west of the divided country
agreed May 17 to resume exports from Hariga port to help revive
production, which has dropped 80% since the 2011 uprising that ousted
Muammar Qaddafi. It isn’t clear if it will send anyone to the meeting;
it didn’t attend the Doha freeze talks in April.
NIGERIA
Price needed: $104.49 (RBC Capital Markets) Share of OPEC production: 5.1%
A resurgence in militant attacks in Nigeria’s oil-producing region has
cut output to the lowest in 27 years, helping buoy global prices. An
armed group calling itself the Niger Delta Avengers has warned of more
attacks to come.
QATAR
Price needed: $52.4 Share of OPEC production: 2%
Mohammed Al Sada, Qatar’s minister of energy and industry who is also
president of OPEC, said global demand is catching up with supply and the
market should see a “rebalancing” in the second half of the year as
cheaper crude has forced some production to close. Qatar is expected to
swing into a budget deficit this year, according to the IMF.
SAUDI ARABIA
Price needed: $66.7 Share of OPEC production: 31%
Saudi Arabia will probably keep producing crude at near-record levels
under new Energy Minister Khalid Al-Falih, an ally of Deputy Crown
Prince Mohammed bin Salman. Prince Mohammed scuppered the oil-freeze
plan, and Al-Falih’s appointment points to an “exceedingly high
probability that there will be no Saudi agreement to freeze let alone
cut production,” analysts including Ed Morse said in an emailed note
dated May 9.
UNITED ARAB EMIRATES
Price needed: $71.8 Share of OPEC production: 8.9%
U.A.E. still supports stability in the oil market, said Matar al Neyadi, the undersecretary of the energy ministry.
VENEZUELA
Price needed: $121.06 (RBC Capital Markets) Share of OPEC production: 7.4%
Venezuela is one of the so-called Fragile Five OPEC members most at
risk from significant instability amid the turmoil in prices, according
to RBC Capital Markets LLC. Energy Minister Eulogio Del Pino was one of
the most ardent advocates of the failed production-freeze agreement.
While the country’s economy remains in critical condition, Caracas is
probably resigned to the course set by Riyadh, said Jason Bordoff,
director of the Center on Global Energy Policy at Columbia University in
New York.
Source: worldoil.com